Economic growth in the euro zone slowed to 0.3 per cent in the second quarter, but activity was forecast to accelerate by the end of 2005, the Eurostat statistics agency said today.
Growth slowed from 0.4 per cent in the first quarter of the year to 0.3 per cent in the second quarter, Eurostat said.
It stuck to its forecast of faster economic growth in the euro zone in fourth quarter.
The European Commission's agency saw third quarter growth in a range of 0.2 to 0.6 per cent against the previous quarter, accelerating to 0.4-0.8 per cent in the last three months of 2005.
The forecast was unchanged from estimates published in August.
The commission said last week that if actual growth in the second half of the year comes in at the mid-point of the ranges, full-year economic growth would be 1.2 per cent, a sharp slow down from 2.1 per cent in 2004 mainly due to expensive oil.
Euro zone finance ministers said on Monday they too saw signs of an economic recovery in the latter part of the year, despite the high price of oil.
Industrial production data from the euro zone's third biggest economy Italy on Thursday showed a much stronger-than-expected jump in industrial output in August of 1.3 per cent against July.
July production in Italy was revised upwards to 0.9 per cent from 0.5 per cent, but high oil prices drove French inflation in September to a higher-than-expected monthly rise of 0.4 per cent and 2.4 per cent year-on-year. Eurostat estimated inflation in the euro zone was 2.5 per cent in September, up from 2.2 per cent in August.
The European Central Bank (ECB) wants to keep inflation below, but close to 2.0 per cent, and has recently stepped up its anti-inflationary rhetoric, saying it was ready to raise interest rates if the oil price feeds through to high wage demands.
But economists believe that the euro zone's sluggish growth rates will help keep the ECB's rates on hold until next year.